Should a Kansas state insurance program be expanded to cover entirely predictable events?
A bill introduced in the Kansas Senate would allow school bus drivers working for private bus companies to collect unemployment insurance during the summer months when school is not in session. Currently these employees are specifically excluded from eligibility for unemployment insurance benefits.
Is it a good idea to extend unemployment insurance benefits to seasonal workers like these bus drivers? Part of the answer depends on what we want the meaning of the word “insurance” to be. Usually, insurance refers to something that mitigates harm from unforeseen circumstances, like a fire, tornado, or automobile accident. These are unpredictable events, although their probabilities can be forecast with accuracy considering a large population. But for jobs and employment, most job losses are unanticipated. Companies don’t wish for a loss of business that leads to layoffs.
But it is certain that school bus drivers will not have a job driving a school bus in the summer. So should this predictable event be covered by insurance? It would be like having routine auto maintenance and a set of new tires every four years paid for by auto insurance. It’s not necessarily a bad idea, but it transforms insurance — something that protects against accidents — into something that pays for the routine and predictable.
The Unemployment Insurance Employer Handbook, published by the Kansas Department of Labor, explains how the rates that employers are charged for unemployment insurance premiums are determined. The rate is based on loss experience: “Experience rating helps ensure an equitable distribution of costs of the unemployment compensation program among employers. It is a procedure for varying employer rates and allocating costs of the Unemployment Insurance program in relation to the employer’s actual and potential risk with unemployment.” This is congruous with how many forms of insurance are priced. For example, drivers with bad driving records pay higher rates than those with good records, as their likelihood of future claims is greater, based on past experience.
So if the bill passes and bus drivers become eligible for unemployment benefits, we would expect the bus companies to have fairly high unemployment insurance rates. After all, they have many employees that would apply for and receive benefits on a regular basis. This higher insurance cost would be paid for by a private bus company. So is there an issue of public policy here?
First, I don’t know if the higher unemployment insurance rates the bus companies would pay would be sufficient to cover the cost of the unemployment insurance benefits the drivers receive. If not, then someone else — taxpayers — have to pay.
Second, who will really pay the bus companies’ higher unemployment insurance premiums? It’s likely the bus companies will try to pass along these higher costs to their customers. Those are primarily public schools, which, of course, are funded by taxpayers.
So yes, there is an issue of public policy. Costs will rise, and it appears that taxpayers will bear all, or nearly all, of the increase. There is the further consideration that an insurance program is converted into another entitlement program, again at taxpayer cost.
A possible solution is this: Schools may offer teachers an option to receive their pay during school months only, or spread across the entire twelve months of the year. Bus companies could do the same.